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Video services

Charter to Wrap Docsis 3.0, SDV Upgrades in '11

Charter Communications Inc. expects to complete its deployment of Docsis 3.0 and switched digital video (SDV) by the end of 2011 and believes that the opportunity for commercial services in its footprint is about $8.5 billion.

Those were two of the big tech themes to emerge from Charter's first earnings call this morning. (See Charter Posts Q1.)

The MSO continues to stay aggressive with D3, reporting that it finished the quarter with 70 percent of its 11.8 million homes passed with wideband and 64 percent passed with SDV, a technique that frees up space for Docsis 3.0 channel bonding, more HDTV channels and additional video-on-demand (VoD) capacity.

"We will be done by the end of this year," Charter President and CEO Mike Lovett said when asked when the MSO would complete those deployments. (Capex spending for the quarter, by the way, was $356 million, up 15 percent year-on-year.)

Charter's one of only a few Tier 1 U.S. MSOs that has not yet launched a 100Mbit/s residential wideband service. Its high-end tier, Ultra60, tops out at 60 Mbit/s downstream and 5 Mbit/s upstream. However, its business services unit does use D3 to deliver downstream bursts of 50 Mbit/s, 75 Mbit/s and 100 Mbit/s. (See Charter Bumps Cable Modem Speeds.)

Bigger business
Residential services are still Charter's core business, but commercial services are clearly emerging as the big growth engine many cable operators are trying to stoke. Charter EVP of Technology and President of Commercial Services Don Detampel estimated that there's an $8.5 billion market opportunity in the MSO's footprint. (See Cable's $5B Biz Services Bonanza .)

Of that number, he says there's $1 billion per year out there for small businesses (fewer than 20 employees); $1 billion for the mid-sized segment; $3 billion for large business with multiple sites, with the rest falling into the carrier wholesale bucket -- an area that Charter's been getting more active in of late following Carrier Ethernet exchange deals with CENX Inc. and Equinix Inc. (Nasdaq: EQIX). Detampel said Charter is providing backhaul service for about 900 cell towers. (See Charter Cranks Carrier Wholesale Efforts.)

But it's got a ways to go before it nears the revenue potential in any business services category. First-quarter commercial services revenues were $137 million, up 16 percent year-on-year.

The other numbers
First-quarter revenues were $1.77 billion, up 3.1 percent, along with a net loss of $110 million (97 cents per share), versus net income of $24 million (21 cents per share).

Charter lost 25,100 video subs, giving it a total of 4.25 million. It added customers in other service areas, but growth slowed as it signed up 87,900 Internet customers (versus 102,300 a year earlier), and 24,000 phone subs (off from 66,700).

Other tidbits from the call
  • Charter hasn't launched an in-home streaming service for iPads and other mobile devices, but believes it has the rights to do so. "It's simply another screen, is how we look at it, whether it's an iPad or another tablet or another device. We feel like we have those rights today," Lovett said.

  • But Charter has no plans to do that just yet. The first phase of its iPad strategy will lean on the app developed by TiVo Inc. (Nasdaq: TIVO). At the start, that will be limited to command functions that turn the tablet into a remote control. (See Charter Throws In With TiVo.)

  • Lovett said Charter is getting ready to run "several pilots" with TiVo, and expects to start deploying those boxes later this year and go into "full production across the enterprise in 2012."

    — Jeff Baumgartner, Site Editor, Light Reading Cable

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